16/9/2009
By Sophie Baker
Romanian pension funds posted positive returns for the first eight months of 2009, with average results of 11.31 per cent in mandatory pension funds, and 10.73 per cent for voluntary pension funds.
The Romanian Pension Funds' Association (APAPR) has published data showing that the 12 mandatory pension funds (the second pillar) on its radar have returned 15.53 per cent for the last 12 months, ending August 2009. Net assets under management reached €476million in the first 16 months after the inception of the system in May 2008. Funds are invested very conservatively, and the majority are in state securities, bonds and money market instruments. Equity exposure has fallen from ten per cent in May 2008 to five or six per cent currently; however, in February this exposure fell to 1.2 per cent.
The 13 voluntary pension funds (third pillar) covered by the APAPR showed a 10.65 per cent return for the last 12 months, with net assets under management at over €38million in the first 28 months after the launch of this system in May 2007. The total number of plan members hit 175,000, and these funds, while conservative, are more equity-inclined than those in the second pillar, at ten per cent.
Crinu Andanut, chairman of APAPR, commented: "Returns posted by all the Romanian private pension funds proved out to be remarkable and the conservative approach paid off. All in all, we can now say our industry kicked off with outstanding results. We managed to escape the crisis unharmed by the global fall in equity markets, but we entered those markets just in time to benefit from the rally in the last few months. Our only drawback is the very low level of contributions - only two per cent for the mandatory funds, for example. It's a shame that the industry managed to perform admirably in terms of returns, and we put those returns on top of so small contributions directed to the system."
Of all Central and Eastern Europe (CEE) countries, Romania has the lowest level of contributions directed to second pillar funds, at two per cent, although it intends to raise this to six per cent in 2016.
